Asked by Katey Dotson on Jun 17, 2024
Verified
Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July 2000 units were produced using 4200 hours at $18.30 per hour. The labor price variance was
A) $1260 U.
B) $4860 U.
C) $4860 F.
D) $3600 U.
Labor Price Variance
This is the difference between the actual cost of labor and the standard cost, indicating how much more or less was paid for labor than expected.
Direct Labor Cost
This refers to the wages and benefits paid for the hours that workers directly spend on manufacturing a product or performing services.
Produced
The process of creating goods or services through the combination of labor, capital, and materials, or the outcome of such a process.
- Evaluate the aggregate discrepancies in overhead costs, labor pricing and quantity variances, and variances in material pricing and quantities.
Verified Answer
NR
Noemi ReyesJun 19, 2024
Final Answer :
A
Explanation :
The labor price variance is calculated as (Actual Hourly Rate - Standard Hourly Rate) x Actual Hours Worked. Here, it is ($18.30 - $18.00) x 4200 = $0.30 x 4200 = $1260 Unfavorable (U), because the actual rate is higher than the standard rate.
Learning Objectives
- Evaluate the aggregate discrepancies in overhead costs, labor pricing and quantity variances, and variances in material pricing and quantities.